Economies of Different Countries Essay Sample

Mention latest changes in economies of different countries whose classification is on the following basis:

Advanced economies: post-industrial countries characterized by high per-capita income, highly competitive industries, and well-developed commercial infrastructure. E.g. Australia, Canada, Japan, United States and Western European countries.

Developing economies: low-income countries characterized by limited industrialization and stagnant economies. E.g., most low income countries in Africa, Latin America, and Asia, such as Bangladesh, Nicaragua and Zaire. Emerging market economies: a subset of former developing economies that have achieved substantial industrialization, modernization, improved living standards, and remarkable economic growth. They are some 27 countries in East and South Asia, Latin America, Middle East and Eastern Europe. Examples: Brazil, Russia, India, China.

Answer-3

There are numerous factors that are considered while analyzing the economies of different countries. And these factors highly affect the conditions and structure in the economies of the countries. The factors could be per-capita income, infrastructure, industrialization, standard of living, education, literacy rate, etc.

On the basis of these factors, there are basically 3 main classifications of the economies: * Advanced or Developed economies:
It consists of high per-capita income, high degree of industrialization, high living standards, and highly competitive industries.

* Developing economies
They have limited industrialization and low income countries.

* Emerging market economies
These are the subset of developing economies having substantial industrialization.

ADVANCED ECONOMIES CANADA

The economic freedom score of Hong Kong is 79.9, making its economy the 6th freest economy in the 2012 Index. Its overall score is 0.9 point lower than the last year’s score. This is because of the worsening scores for government size and the monetary freedom. Though it has dropped just below the cut off for characterization as a free economy, Canada is still the freest economy in North America region. The foundations of economic freedom are very strong in Canada.

Its economy has emerged from the global economic slowdown. The steady reduction in the rate of standard corporate tax in the past three years has also contributed to Canada’s competitiveness.

Canada has a population of 34.4 million. The unemployment rate of Canada is 8% and the inflation rate is 1.4%. Canada has seen a growth of 3.1% in the GDP and has a per capita income of $39,057. Its FDI inflow is $23.4 billion.

Canada has a multi-ethnic population that is governed under the federal democratic system which provides substantial provincial and territorial autonomy. The Prime Minister of Canada, Stephen Harper won a second term in May 2011 as his Conservative Party gained a solid majority in Parliament. He aims at lower taxes, a strong defense and fighting crime. Canada is a party to the North American Free Trade Agreement which connects 450 million people in an economic area, thereby, producing about one-third of the world’s GDP. Canada is a major producer of oils, automobiles, minerals, manufactured goods and forest products.

The following diagram shows the country’s score over the past 5 years.

Rule of Law

The foundations of Canada’s economic freedom are solid. Proper protection of private property is provided, and an independent and transparent judicial system is firmly in place. There is secure contract enforcement, and expropriation is highly illegal. Protection of intellectual property rights is consistent with world standards. Effective anti corruption measures are adopted to discourage bribery of public officials and maintain a clean government.

The income tax rate of top federal is 29%. The top corporate tax rate declined to 15% in January 2012 from 16.5%. Other taxes include value added tax (VAT) and property tax, with the overall tax burden totaling to 31.1% of total domestic income. Government spending has increased to over 40% of total domestic output. Budget deficits have widened, and public debt has risen.

The regulatory framework is highly conducive to formation and operation of business, with no requirement of minimum capital to start a company. The average cost for obtaining necessary licenses has been cut almost to half. Flexible labor regulations enhance employment and growth in productivity. There has been modest inflation, but the government controls all prices of health care services virtually through its mandatory “single player” nationalized program.

The trade regime of Canada is very competitive, with low tariff or non-tariff barriers facilitating dynamic gains from free trade. The flexibility and openness of Canada strongly sustain the efficient and dynamic investment environment. The global financial turmoil has been weathered by prudent banking sector with no need for considerable injections or bailouts of state funds. The “six big” domestic banks account for around 90% of total assets.

The economic freedom score of Bangladesh is 53.2, which makes its economy the 130th freest economy in the 2012 index. Its score is 0.2 point higher than the last year’s score. This is because of improvements in business freedom and labor freedom that counterbalance a significant drop in trade freedom. Out of 41 countries in Asia-Pacific region, Bangladesh is ranked 28th.

Bangladesh continues the five year move toward greater economic freedom that has brought this country out of the status of “repressed”. The advancements in freedom has been accompanied by notable economic growth, average 6% per year over the same period.

Bangladesh is one of the world’s poorest nations, and the majority of its population work in agriculture, though service industries now account for over half of GDP. Poverty, weak institutions and too much government interventions, leading to corruption, fuels social and economic unrest and undermine economic development. United States provides relatively large inflows of remittances and around $100 million per year in aid to Bangladesh.

Bangladesh has a population of 164.5 million. The unemployment rate of Bangladesh is 4.8% and the inflation rate is 8.2%. Bangladesh has seen a growth of 6.0% in the GDP and has a per capita income of $1,572. Its FDI inflow is $913.3 million.

The following diagram shows the country’s score over the past 5 years.

Rule of Law

Based on the British model, the Civil court system and the constitution provides an independent judiciary. However, dispute settlement and contract enforcement are inefficient. Corruption remains a serious problem. The effectiveness of Bangladesh’s Anti-Corruption Commission is under threat of proposed amendments to the Anti-Corruption Commission Act, which contains a number of procedural changes.

The top income tax rate for an individual is 25% and for corporate is 45%. Other taxes include value-added tax (VAT), which is currently being reformed. The overall tax burden amounts to 8.6% of total domestic income. The government spending is 14.3% of total domestic output. Public debt has decreased to 50% of GDP. Due to heavy bureaucracy, the overall effectiveness of government is poor.

Regulatory efficiency has been improved by recent reforms. Starting up of a business is simpler, with start-up shortened by 19 days, reducing the costs of getting necessary permits and establishing a company. Despite of under-developed well functioning labor market, labor productivity growth is slightly higher than wage hikes. There is high inflationary pressure and price control measures have been in place.

The weighted tariff rate for trade is 13%, with non-tariff barriers which further increases the cost of the trade. Potential investors face a host of challenges, despite welcomed foreign investment. In general, government laws and regulations and their implementation create rather reduced impediments to investments. Government interference and ownership remain considerable in the financial sector, which undermines the sector’s efficiency.

The economic freedom score of Malaysia is 66.4, which makes its economy the 53rd freest economy in the 2012 index. Its score is 0.1 point higher than the last year’s score. This is because of gain in public freedom partially offset by declining effectiveness in the control of government spending. Out of 41 countries in Asia-Pacific region, Malaysia is ranked 9th and its overall score is above the world and regional averages.

In the face of challenging global economic environment, the Malaysian economy has shown a moderate degree of resilience. Reform efforts have been continued in many of the pillars of economic freedom. The overall regulatory framework of Malaysia is now more efficient and business procedures have been streamlined. Implementation of policies that are intended to encourage vibrant private sector and support open market is enhancing investment flows and the vitality of entrepreneurship has been improved. In contrast to its improved performance in other areas, Malaysia lags in promoting the effective law and modernizing the legal framework. The judicial system is still vulnerable to political interference, and property rights are not protected strongly. Corruption further undermines freedom and hampers long-term institutional competitiveness. There has been an expansion in Government spending in recent years, threatening the overall economic efficiency.

Malaysia has a population of 28.3 million. The unemployment rate of Malaysia is 3.5% and the inflation rate is 1.7%. Malaysia has seen a growth of 7.2% in the GDP and has a per capita income of $14,670. Its FDI inflow is $9.1 billion.

The following diagram shows the country’s score over the past 5 years.

Rule of Law

Private property is protected, but the judicial system is subjected to political influence. It takes more than a year for corporate lawsuits to adjudicate, and there is a mandatory arbitration clause included in many contracts. Despite plans to rectify the World Intellectual Property Organization Copyright Treaty and Performances and Phonograms Treaty, there are persistent complaints regarding lax enforcement of intellectual property rights.

The top individual income tax rate for an individual is 26% and for corporate is 25%. Other taxes include a capital gains tax, which amounts the overall tax burden to 15.7% of the total domestic income. There has been an increase in government spending to a level of 30% of total domestic output. There has been a deficit in the budget balance and the public debt has increased to 50% of GDP.

No minimum capital is required for establishment of a company. On an average, it takes only four procedures and six days to start a new business. Steps required to introduce greater efficiency have been implemented in recent years. Licensing requirements are now less time-consuming and bureaucratic. The flexibility and modernization of labor regulations have increased. Inflation rate has been under control.

The weighted average tariff rate of trade is modest at 3.1%, but non-tariff barriers are responsible for increasing the cost of trade. Foreign investment is officially welcome and there have been more efforts to attract more flow. But still, government interference and lack of transparency decrease the dynamic growth in new investment. Despite the challenges of external environment, the banking sector has been stable, although extensive regulations undermine competitiveness.